KUALA LUMPUR, May 21 — AirAsia’s shares remain actively traded on Bursa Malaysia in the early session this morning, garnering eight sen to RM2.41 at 10:06 am, following the release of the budget carrier’s handsome first quarter results ended March 31, 2014, yesterday.
The low-cost airline’s net profit surged 33 per cent year-on-year to RM139.72 million during the period, mainly due to foreign exchange gains on borrowings.
However, its revenue remained flat at RM1.3 billion, while seat load factor increased two percentage points to 81 per cent in line with the company’s focus on its load active strategy.
Hong Leong Investment Bhd (HLIB) said AirAsia’s core earnings at RM126.6 million in the first quarter was 21.9 per cent of HLIB’s financial year 2014 (FY14) forecast and 18.2 per cent of consensus.
“We expect yields to remain depressed in the second quarter before improving in the second half of the year on seasonally stronger demand,” it said in a note.
Going forward, the investment bank said the airline would gain from strong air traffic into Malaysia in line with the government’s initiatives to boost the tourism sector.
However, high jet fuel costs; strengthening of the US dollar; and stiff competition from MAS and Malindo Air would be challenges to AirAsia, it said.
HLIB has maintained its “Hold” call on AirAsia with an unchanged target price at RM2.22
Meanwhile, RHB Research Institute said the carrier’s RM41.2 million core earnings were below their estimates, with the disappointment arising from AirAsia’s loss-making associates.
“We slash our FY14 earnings estimate by 53 per cent but keep our FY15 earnings forecast relatively unchanged.
“It is worth noting that yields have bottomed and should see an uptrend ahead,” it added.
The research house maintained its “buy” recommendation but with higher fair value at RM2.78 based on FY15 earnings. — Bernama
